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The team from Charity Navigator, the nation's largest independent charity evaluator and leading donor advocate, shares their thoughts on emerging nonprofit-sector issues and offers tips to better inform your intelligent giving decisions.

Wednesday, April 27, 2016

It's Not Our Money

Photo Credit: Direct Relief

One of the key challenges facing charities responding to a disaster is how to handle donor-designated money. Direct Relief, a 4-star charity, eloquently describes their stance on donor designations, and the obligation entrusted to them by donors during a crisis. Please see our feature article on how Direct Relief and other organizations have responded to the tragic earthquake in Nepal one year ago.

Several years ago, following another emergency in which Direct Relief became the focal point for significant charitable contributions, the amount of restricted-by-donor cash contributions for that event exceeded our entire planned operating budget for the year. When I mentioned this had happened to our then board chair who was onsite handling phone calls, she said, “Well, this isn’t our money. The people calling are giving money to Direct Relief, but it’s for the people they’re seeing on TV living through hell.” Simply said, and exactly right – then, and in every similar event that inspires private giving to help the people or country that experiences a disaster. The Asian tsunami. Hurricanes Katrina and Sandy. The earthquakes in Haiti, Pakistan, and Indonesia. Typhoon Haiyan in the Philippines. The recent cyclone in Fiji, and current flooding in Houston and earthquake recovery ongoing in Ecuador. And Nepal.

For Direct Relief and all American nonprofits, “honoring donor intent” has long been a bedrock principle – but we recognize it’s difficult to assess adherence to, since the only standardized basis of comparison is a single, lengthy IRS form that all groups submit annually and requires groups like Charity Navigator to interpret and make the contents understandable for the public. It’s impossible to honor donor intent without giving donors the opportunity to express that intent. That’s why seemingly little things, like the specific language on website donation pages and in solicitations are so important – particularly in high-profile, deeply compelling emergencies such as occurred in Nepal after last year’s tragic earthquakes.

But, the anniversary of the Nepal tragedy also reminded us of the special obligation that Direct Relief has to the people of Nepal, having been entrusted with funds directed to our organization for their benefit. It seems an important – maybe the most important – obligation, and we hope we get it right, even though it’s different from the legal requirements and norms so obviously essential to inform those who made generous contributions that allowed Direct Relief to assist as it has and will continue to do.